Investing, Tax Planning

Can You Have Too Much of a Good Thing?

February 23, 2022

The Quest for Balance

The stock market was up nearly 27% last year,* a boon to many investors. But can it be possible to have too much of a good thing?

Your asset allocation is a key driver of long-term portfolio performance.

When we create your investment portfolio, we allocate your investments into diversified selections of equity, fixed income, and other asset classes to align with your investment timeframe, objectives, and feelings about risk. This ‘asset allocation’ aims to provide you with competitive, risk-adjusted returns that we believe are appropriate and sustainable based on your individual goals.

Over time, your allocation will naturally shift.

Each year, some of your investments perform better than others, which may cause your portfolio allocation to shift. Allocations may also shift based on our perception of the current relative attractiveness of each asset class.

Your Washington Trust team keeps you on track toward your goals.

At times, it may be best to temporarily have a bias or be in the upper range of your asset class target percentage. However, we regularly evaluate your allocation against your goals to make sure your portfolio remains consistent with your objectives. We consider a variety of factors when reviewing your asset allocation, including the tax consequences of selling high-performing assets and opportunities for reinvestment.

Please reach out to your Washington Trust Wealth Advisor if you have any questions about your investment portfolio, asset allocation, or would like to review your strategy for achieving long-term wealth goals. As your trusted advisors, we stand ready to serve all of your wealth management and planning needs.

* S&P 500 ends 2021 with a nearly 27% gain, but dips in final trading day, CNBC, 12/31/21

The views expressed here are those of Washington Trust Wealth Management and are subject to change based on market and other conditions. Investment recommendations and opinions expressed in these reports may change without prior notice. All material has been obtained from sources believed to be reliable, but its accuracy is not guaranteed.

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This document is intended as a broad overview of some of the services provided to certain types of Washington Trust Wealth Management clients. This material is presented solely for informational purposes, and nothing herein constitutes investment, legal, accounting, actuarial or tax advice. It does not take into account any investor's particular investment objectives, strategies, tax status or investment horizon. Please consult with a financial counselor, an attorney or tax professional regarding your specific financial, legal or tax situation. No recommendation or advice is being given in this presentation as to whether any investment or fund is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors, or markets identified and described were, or will be, profitable.

Any views or opinions expressed are those of Washington Trust Wealth Management and are subject to change based on product changes, market, and other conditions. All information is current as of the date of this material and is subject to change without notice. This document, and the information contained herein, is not, and does not constitute, a public or retail offer to buy, sell, or hold a security or a public or retail solicitation of an offer to buy, sell, or hold, any fund, units or shares of any fund, security or other instrument, or to participate in any investment strategy, or an offer to render any wealth management services. Past Performance is No Guarantee of Future Results.

It is important to remember that investing entails risk. Stock markets and investments in individual stocks are volatile and can decline significantly in response to issuer, market, economic, political, regulatory, geopolitical, and other conditions. Investments in foreign markets through issuers or currencies can involve greater risk and volatility than U.S. investments because of adverse market, economic, political, regulatory, geopolitical, or other conditions. Emerging markets can have less market structure, depth, and regulatory oversight and greater political, social, and economic instability than developed markets. Fixed Income investments, including floating rate bonds, involve risks such as interest rate risk, credit risk and market risk, including the possible loss of principal. Interest rate risk is the risk that interest rates will rise, causing bond prices to fall. The value of a portfolio will fluctuate based on market conditions and the value of the underlying securities. Diversification does not assure or guarantee better performance and cannot eliminate the risk of investment loss. Investors should contact a tax advisor regarding the suitability of tax-exempt investments in their portfolio.